Apple Commits $2.5B to Combat Affordable Housing Shortage in California
CUPERTINO, CALIF. — Apple Inc. (NASDAQ: AAPL) has announced a $2.5 billion plan to address the housing availability and affordability crisis in California.
Much like Facebook’s recent announcement to commit $1 billion and build 20,000 affordable housing units in the Golden State, Apple cited the major discrepancy between the paces of population growth and affordable housing development as the key catalyst behind its plan. Earlier this year, Microsoft Corp. and Alphabet Inc., the parent company of Google, also pledged a combined $1.25 billion toward the development of affordable housing in metro Seattle and the Silicon Valley area, where those two firms are respectively based.
In supporting this measure, Apple referenced a recent study by real estate brokerage firm Redfin that found that some 30,000 people had vacated the San Francisco area between April and June of this year. The study also found that the rate of homeownership in the Bay Area has hit a seven-year low.
Both pieces of information suggest that residents, whether buying or renting, are simply being priced out of the region. In response to the growing cost of housing in California, Gov. Gavin Newsom signed a bill in October that would cap annual rent increases imposed by landlords at 5 percent plus inflation until 2030.
The major tenets of Apple’s program center on accelerating the development of new housing, helping first-time buyers purchase homes and funding new housing and support programs to reduce homelessness. Specifically, the company plans to undertake the following initiatives:
- Fund $1 billion in affordable housing development via an open line of credit to the state of California to develop housing at a faster pace and lower cost.
- Establish a $1 billion fund that will provide financing and down payment assistance to prospective homebuyers.
- Make $300 million of Apple-owned land available for the development of new affordable housing projects.
- Provide $200 million to support new housing for lower-income residents of the Bay Area.
“Before the world knew the name Silicon Valley, and long before we carried technology in our pockets, Apple called this region home, and we feel a profound civic responsibility to ensure it remains a vibrant place where people can live, have a family and contribute to the community,” says Tim Cook, Apple’s CEO.
“The sky-high cost of housing — both for homeowners and renters — is the defining quality-of-life concern for millions of families across this state, one that can only be fixed by building more housing,” adds Gov. Newsom. “This partnership with Apple will allow the state of California to do just that.”
The funding commitment to California is expected to take approximately two years to be fully utilized depending on the availability of projects. Capital returned to Apple will be reinvested in future projects over the next five years.
Apple’s stock price opened at $257.33 per share on Monday, Nov. 4, up from $204.30 per share a year ago.
— Taylor Williams